Bank Negara Malaysia’s (BNM) decision to place several gold investment companies on an alert list is seen as “the right measure to look into the legal framework and mechanism to regularise the trading of gold in the country.”
However, the regulatory move has reflected poorly on some legitimate businesses, said Gold Bullion Entrepreneurs Association of Malaysia (GBEAM) secretary-general Datuk Joseph Kow.
Kow, in a media release yesterday, admitted that the gold trading business is currently unregulated, with no special licence or approval required from any authorities, including BNM.
“The government has taken the right measures to look into the legal framework and mechanism to regularise the trading of gold in the country,” said Kow.
According to Kow, currently no import or export permits are required for the trading of gold. Those wishing to bring in gold bars from foreign countries only need to declare their purchase to the Malaysian Customs in accordance with the government’s US$10,000 (RM31,100) import limit, said Kow.
According to the Gold Exemption Order 1986, every person in Malaysia is free to buy, lend, sell, borrow, hold or export gold.
“This would mean there is no reason for any gold trader to be blacklisted as recently stated in the media,” he said.
In recent media reports, BNM had blacklisted 77 companies for various reasons, including operating without a licence and being involved in unauthorised and unapproved activities.
The reports adversely affected some who claim their enterprise is legitimate and have voiced their dissatisfaction to GBEAM.
What is being regulated by the central bank is deposit-taking in the gold trade which is governed by the Banking and Financial Institutions Act, and this requires a licence from BNM, said Kow. Meanwhile, the government’s decision to form a task force to regulate gold trading has been welcomed by industry players and association members.
The task force, comprising representatives from the Finance Ministry, BNM, Securities Commission, Bursa Malaysia, Companies Commission of Malaysia and the Attorney General’s Chambers, is seen as a “step in the right direction.” The price of gold has risen in the past 10 years from US$280 an ounce to more than US$1,600.
Another industry player also welcomed the decision to establish a task force as the move will help crack down on get-rich-quick schemes disguised as gold investment companies.
“The move will help regulate smaller players and remove any businesses dealing in fake gold or those selling at much lower rates than legitimate businesses.
Some businesses charge a premium for the gold, which they then return to the buyer in the form of a so-called return on investment. This is kind of a get-rich-quick scheme, which the task force will hopefully remove,” he told The Malaysian Reserve yesterday.